California could be the first state to cut student aid while hiking fees

Gov. Arnold Schwarzenegger's plan to dismantle the Cal Grant program would make California the first state in the recession-battered nation to eliminate student financial aid while raising college tuition, experts said this week.

"Other states are cutting back, but not a complete phase-out," said Haley Chitty, communications director for the National Assn. of Student Financial Aid Administrators.

The governor's proposal would end all new Cal Grants, eventually eliminating the state's main financial aid program for college students, and prevent existing awards from increasing. Grants awarded to 118,000 freshmen starting college in the fall would be canceled, as well as hikes in 82,255 continuing awards promised when the University of California and California State University raised fees this month by 10% and 9.3%, respectively.

At the University of California, among other options, students with university grants could see some of their money shifted to those who have lost Cal Grants, officials said. California State University and schools in the California Community Colleges System have yet to decide how to respond to the potentially devastating aid cuts, they said. The proposal would save an estimated $173 million in 2009-10 and $450 million in 2010-11, state officials said.

The Cal Grant program has existed in some form since the mid-1950s and was expanded in 2000 to cover virtually all low-income graduates of state high schools attending private or public two-year or four-year colleges or career institutes, officials said.

Higher education policy analysts rank the program among the best in the nation, both for its generosity -- top awards can cover full fees or tuition at public colleges -- and its focus on mainly low-income students in a state with an increasingly poor college-age population.

Until Schwarzenegger's plan was announced, it expected that 280,798 students would receive Cal Grants during the 2009-10 academic year.

"Why the poorest would take a double hit, I don't know," said Patrick M. Callan, president of the San Jose-based National Center for Public Policy and Higher Education. "It makes no sense."

H.D. Palmer, spokesman for the state's Department of Finance, said the governor took "no pleasure" in his plan and was open to other ideas. "We have been forced to put forward proposals that would have been unthinkable even a few short months ago," Palmer said.

Some observers asked whether the governor was using the popular Cal Grant program as a bargaining chip to get the Democratic-controlled Legislature to make other concessions. But state and higher education officials said the program really could be axed, if only because the alternatives are even more dire. "This is not a test," said Palmer.

"We're taking it very seriously," said Jonathan Brown, president of the Assn. of Independent California Colleges and Universities.

Some educators said the cutbacks would wipe out any gains from federal stimulus money for higher education.

Because the potential effect is so sweeping, those interviewed said, it's hard to assess how students might respond, but they may have to work more, live at home, go more deeply into debt or beseech their families for further sacrifices.

But at least one student said she could run out of options.

BreeAnna Banks, 17, of Carson had been counting on her $1,500 Cal Grant award to help with her plans to enter Mount St. Mary's College in downtown Los Angeles as a freshman in August.

Her father is a Boeing mechanic, and her mother, SharRon Banks, is a homemaker raising seven children, including four the family adopted because their birth mother couldn't care for them. Two of the children are disabled and need medicine, and the family just emerged from a bad loan foreclosure drama that sent their house payments soaring.

"We were eating rice and pot pies," SharRon Banks said.

BreeAnna said her family has only one car, so commuting is out, the college is tapped out of aid and loans could be hard to get.

"I understand California needs money . . . but this is taking away many people's opportunity to become something in life," she said.

"People in my community look around and say college must just be for people who have a lot of money. Maybe they feel Cal Grant is not a big factor in going to college, but it is.